The present invention relates to technologies, processes and algorithms that quantify medical quality and cost efficiencies for the purpose of creating, financial incentives for rewarding medical providers (hospitals and physicians). The invention uses objectively defined metrics of clinical quality and cost efficiency improvements that are trended over a multi-year period to determine a “Medical Value Index” (MVI). The MVI quantifies the relative quality and cost efficiencies of hospitals and clinical services within the hospitals (orthopedics, cardiology etc.) and determines relative reimbursement rates based on the providers' outcomes. Higher quality and greater efficiencies yield higher reimbursements for the providers. More particularly, the invention's technologies, processes and algorithms transform routinely used, hospital and insurance data into actionable, clinical quality information, which physicians can use to improve the outcomes of their patients' care. The invention's algorithms then aggregate the results of physicians' practice pattern improvements and assign appropriate provider (physician and hospital) and insurer remunerations based on the observed quality and cost efficiency outcomes.
Beginning, in the late 1980's and up to the present, US private and public healthcare purchasers and their insurers have been relying on managed care entities to control widely varying levels of questionable medical quality and escalating healthcare costs. To control costs, these third-party, managed care entities limited patients' access to their chosen physicians and implemented stringent price controls. These measures have been only partially effective. After two decades of managed care controls, the quality and costs of patient care remain uncontrolled and excessive leaving America's entire financial future in question.
Employers can no longer sustain their employees' cost increases and patients are more interested in access to their physicians than in their employers' cost savings. For patients, access to their physicians has come at a significant price because employers have begun to shift their cost burdens back onto the employees. The levels of angst have grown to the point that policy makers and even some employers are now suggesting, in spite of all evidence to the contrary, that a nationalized, single-payer system is the only viable option to control costs by the aligning of financial incentives of all stake-holders (providers, public and private purchasers and their insurers as well as patients). The recently enacted federal Patient Protection and Affordable Care Act (PPACA) was a direct response to uncontrolled, costs but it did not implement a single-payer system. However it did usher in other alternatives that involve global payments to hospitals and physicians such as Accountable Care Organizations (ACO), Acute Care Episodes (ACE) and four Bundled-Payment Models. These new delivery systems allow hospitals and physicians to share net-savings, which hold great promise for improving quality and controlling healthcare costs because physicians can now participate in the savings they helped create through improved clinical outcomes. However, these cost sharing mechanisms will be successful only if quality and efficiencies are accurately assessed and providers are appropriately reimbursed for their efforts. Verras' technologies and techniques are unique in their abilities to assist physicians and hospitals with quality and cost efficiency improvements and to translate the changes in practice patterns to appropriate reimbursements for hospitals and physicians who deliver high quality, cost efficient healthcare.
Patients want their choice of providers at reasonable prices. Public and private purchasers, as well as insurers need to know the value of the services they receive for their money; and providers need the latitude to practice their professions unencumbered by third party intrusions. But these ideals have not materialized for any number of reasons, not the least of which is the misalignment of financial incentives between purchasers, insurers, hospitals and physicians. Currently, for one of these groups to financially win, one or more of the others must lose. The effects of misaligned incentives have created a bizarre triad of: excessive profits for insurance and managed care companies that do not deliver care; insufficient funding, for providers who are dedicated and trained to deliver quality care; and diminished access, coverage and services for patients who need care. Distrust among all parties and chaos in the system are the unintended consequences of misaligned incentives and the inability to contract for healthcare services on the basis of objectively defined value, that is, quality and costs.
For these reasons, the alignment of providers' and hospitals' incentives and their integration into common provider groups are viewed as critical components of the solution to control medical quality and costs. To these ends, numerous care delivery models have been tried but few have met with anything but marginal success. This invention changes this and solves the primary, non-political problems relating the quality and cost issue facing the United States' healthcare system.
There are a few examples in which physicians, hospitals and their insurance entities have aligned their incentives and integrated themselves to achieve reasonable levels of medical quality, and to some extent, cost efficiencies and patient satisfaction. The first example is a health maintenance organization (HMO) model, such as Kaiser Permanente. The second is represented by the Mayo Clinic-type model. Delivery systems of these types can be found in a number of cities throughout the country. What is common to both models is their integration and alignment of quality and financial incentives of the three principal components—physicians, hospitals and insurance entities. Their physicians are generally on salary and receive additional remunerations if the enterprise prospers. However, from a national perspective, these models cannot accommodate the majority of US patients who are treated by independent physicians and hospitals with limited access to integrated provider enterprises, such as these examples.
Another attempt to align providers' incentives and thereby control costs is a program called “pay-for-performance.” These initiatives involve the insurer awarding bonuses to physicians for improving a few selected quality indicators. Pay-for-performance has been a largely unsuccessful attempt to achieve what this invention has accomplished, which is the alignment of quality and financial incentives for independent hospitals, physicians and insurers through the novel provisioning of clinical quality improvement and financial information. The key to achieving, the invention's enhanced benefits is transforming the readily available hospital and insurance information into actionable data for physicians to create clinical improvements and aggregating the data into transparent and easily understood measure of quality and efficiencies for the benefit of all stakeholders. The most recent delivery models created by the aforementioned federal legislation (PPACA) make this invention even more valuable than before.
The PPACA legislation implements global budgeting, for hospitals and physicians who will be financially incentivized by Centers for Medicare and Medicaid Services (CMS) for improving the quality and efficiencies of their care. The previously mentioned ACOs, ACEs, and Bundled Payments are three methods as well as other federally designed delivery systems that are dependent on global budgets that will be divided between the hospital and physicians on the basis of objective measures. The technologies, algorithms and quality indices of this invention are uniquely designed to provide the objectively defined, appropriate reimbursements for the hospital and physician providers who are able to create net savings by improving clinical and financial outcomes.